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North American Bond Research – August 24, 2020

Posted on August 24, 2020
HIGH YIELD BOND RESEARCH
August 24, 2020
Bond Markets

FDA EMERGENCY DECREE USE OF BLOOD PLASMA FOR COVID 19 TREATMENT HELPED SHOOT MARKETS UP GLOBALLY. 10 Year Treasury notes were up .6 bps. S&P +1.00%, Dow +1.35%, NASDAQ +0.6%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 23 MILLION+ CASES AND 800000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 5.78 MILLION+ CASES AND 178000+ DEATHS. Among high-grade bonds showing topmost price gains at appreciable volumes traded, Hertz Corp (The) (USD) 7% 1/15/2028 made analysts’ ‘Conviction Buy’ list. (See the chart below for Hertz Corp  bonds) Pierre Robert
Key Gainers and Losers Volume Leaders
+   Pacific Gas & Electric Co. 4.75% 2/15/2044 +1.1%
  Ford Motor Co. 4.346% 12/8/2026 +0.8%
  Howmet Aerospace Inc. 6.875% 5/1/2025 +0.4%
  Eclipse Resources Corp. 8.875% 7/15/2023 +0.2%
  T-Mobile USA Inc. 4.375% 4/15/2040 Reg S +1.9%
–   Ford Motor Co. 4.75% 1/15/2043 -2.6%
  Ball Corp. 2.875% 8/15/2030 -0.7%
  Cheniere Corpus Christi Hldgs LLC 7% 6/30/2024 -0.0%
  FTS Intl. Inc. 6.25% 5/1/2022 -5.7%
  T-Mobile USA Inc. 3.875% 4/15/2030 144A -0.1%
Pacific Gas & Electric Co.   4.75% 2/15/2044
Ball Corp.   2.875% 8/15/2030
Ford Motor Co.   4.75% 1/15/2043
Ford Motor Co.   4.346% 12/8/2026
Cheniere Corpus Christi Hldgs LLC   7% 6/30/2024
Howmet Aerospace Inc.   6.875% 5/1/2025
FTS Intl. Inc.   6.25% 5/1/2022
T-Mobile USA Inc.   3.875% 4/15/2030 144A
SLM Corp.   5.625% 8/1/2033
Eclipse Resources Corp.   8.875% 7/15/2023
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.04% -0.21% 1.44% 5.75% 5.01% 9.06%
Mining -0.07% -0.39% 3.65% 17.49% -8.74% -4.43%
Construction 0.00% 0.08% 0.79% 7.42% 2.25% 5.89%
Manufacturing -0.03% -0.22% 1.40% 8.58% 1.58% 6.08%
Transportion, Communication, Electric/Gas -0.04% -0.26% 0.85% 5.35% 3.42% 6.26%
Wholesale -0.11% -0.18% 1.68% 7.47% 1.87% 5.69%
Retail 0.01% 0.17% 2.56% 10.71% 0.65% 4.50%
Finance, Insurance, Real-Estate 0.01% -0.03% 1.99% 9.45% 1.26% 4.73%
Services -0.05% -0.09% 1.89% 7.59% 1.55% 5.96%
Public Administration 0.21% 0.32% 3.44% 10.53% 5.97% 8.99%
Energy -0.05% -0.48% 3.35% 15.94% -7.33% -3.30%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
 

 

(None Current 08/24/2020)
1. Avianca : $1.3B DIP DD TLB

2. MAG Aerospace: $290.7MM TL (B3/B)

3. CJ Foods Inc.: $285MM TLB

4. Avianca : $1.3B DIP DD TLB

5. UPC/Sunrise: $2.4B term loans (B1/BB-/BB+): $1.2B TLB1; $1.2B TLB2

6. MAG Aerospace: $290.7MM TL (B3/B)

7. CJ Foods Inc.: $285MM TLB

8. CJ Foods Inc.: $285MM TLB

9. Herschend Entertainment Co. LLC: $465MM TLB (B3/B)

10. UPC/Sunrise: $2.4B term loans (B1/BB-/BB+): $1.2B TLB1; $1.2B TLB2

Additional Commentary

NEW ISSUANCE WATCH: No new issues.
Top Widening Loans Top Narrowing Loans
Jostens Inc. (USD) TL L+950 12/21/2026
Wittur (EUR) TL E+850 09/19/2027
NCL Corp. LTD (USD) TLA L+150 01/02/2024
Philadelphia Energy Solutions (USD) TLA L+625 12/31/2022
Safe Fleet Acquisition Corp. (USD) TL L+675 02/01/2026
Mavenir Inc. (USD) TLB L+600 05/08/2025
American Gaming Systems (USD) TL L+1300 02/15/2024
Fleetpride Corp. (USD) TL L+450 12/19/2025
Kindercare Education LLC (USD) TL L+825 08/16/2025
Verifone Inc. (USD) TL L+400 08/20/2025

Loans and Credit Market Overview

SYNDICATED LOANS HIGHLIGHTS:

Deals recently freed for secondary trading, notable secondary activity:

  • Symantec Corp., Broadcom LTD, Toll Brothers Inc., Cole-Parmer Instrument Co.

OVERALL CREDIT MARKET:

Long-term bond yields are expected to hit a cyclical peak in 2019 given tight fiscal policy and lagging global economies. Europe remains checked by stubbornly low inflationary forces.  Positive effects remained in force:

  • TED spread held below 16 bp (basis points), as of 08/24/2020
  • Net negative capital flows into high-yield ETFs & mutual funds
INVESTMENT GRADE BOND RESEARCH
August 24, 2020
Bond Markets

FDA EMERGENCY DECREE USE OF BLOOD PLASMA FOR COVID 19 TREATMENT HELPED SHOOT MARKETS UP GLOBALLY. 10 Year Treasury notes were up .6 bps. S&P +1.00%, Dow +1.35%, NASDAQ +0.6%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 23 MILLION+ CASES AND 800000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 5.78 MILLION+ CASES AND 178000+ DEATHS.  Among high-grade bonds showing topmost price gains at appreciable volumes traded, Halliburton Co. (USD) 5% 11/15/2045 made analysts’ ‘Conviction Buy’ list. (See the chart below for Halliburton Co.  bonds) Pierre Robert
Key Gainers and Losers Volume Leaders
+   Johnson & Johnson 2.45% 9/1/2060 +0.6%
  General Electric Co. FLT% PERP (1) +0.6%
  Wal-Mart Stores Inc. 3.55% 6/26/2025 +0.0%
  Dowdupont Inc. 4.205% 11/15/2023 +0.6%
  Alphabet Inc. 1.1% 8/15/2030 +1.5%
–   Johnson & Johnson 2.25% 9/1/2050 -0.2%
  Microsoft Corp. 3.3% 2/6/2027 -0.2%
  ServiceNow Inc. 1.4% 9/1/2030 -0.1%
  General Motors Financial Co. Inc. 2.7% 8/20/2027 -0.6%
  JP Morgan Chase & Co. 3.25% 9/23/2022 -0.2%
Johnson & Johnson   2.45% 9/1/2060
Johnson & Johnson   2.25% 9/1/2050
Microsoft Corp.   3.3% 2/6/2027
ServiceNow Inc.   1.4% 9/1/2030
General Motors Financial Co. Inc.   2.7% 8/20/2027
General Electric Co.   FLT% PERP (1)
Wal-Mart Stores Inc.   3.55% 6/26/2025
JP Morgan Chase & Co.   3.25% 9/23/2022
Comcast Corp.   1.5% 2/15/2031
Amazon.com Inc.   2.5% 11/29/2022
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining -0.00% 0.07% 0.63% 7.78% 6.19% 7.01%
Construction 0.10% 0.02% 0.86% 6.53% 6.24% 6.47%
Manufacturing 0.04% 0.03% 0.00% 4.64% 7.16% 7.80%
Transportion, Communication, Electric/Gas 0.06% -0.18% -0.32% 5.72% 8.88% 9.22%
Wholesale 0.01% 0.00% 0.61% 6.14% 6.44% 8.71%
Retail 0.01% -0.06% -0.69% 4.07% 8.28% 9.29%
Finance, Insurance, Real-Estate 0.02% -0.03% 0.37% 4.32% 6.02% 6.96%
Services 0.06% 0.03% -0.08% 4.93% 6.89% 7.34%
Public Administration 0.01% 0.07% 0.11% 0.58% 4.74% 4.00%
Energy 0.00% -0.50% 0.48% 7.68% 4.91% 6.09%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Entergy Corp. (USD) 0.9% 9/15/2025 (08/24/2020): 800MM Senior Unsecured Notes, Price at Issuance 99.606, Yielding .98%.

2. Alabama Power Co. (USD) 1.45% 9/15/2030 (08/24/2020): 600MM Senior Unsecured Notes, Price at Issuance 99.544, Yielding 1.5%.

3. Glencore Funding LLC (USD) 1.625% 9/1/2025 144A (08/24/2020): 1000MM Senior Unsecured Notes, Price at Issuance 99.499, Yielding 1.73%.

4. Glencore Funding LLC (USD) 2.5% 9/1/2030 144A (08/24/2020): 1000MM Senior Unsecured Notes, Price at Issuance 99.57, Yielding 2.55%.

5. Nationwide Building Society (USD) 1% 8/28/2025 Reg S (08/24/2020): 750MM Senior Preferred Security, Price at Issuance 99.859, Yielding 1.03%.

6. Glencore Funding LLC (USD) 1.625% 9/1/2025 Reg S (08/24/2020): 1000MM Senior Unsecured Notes, Price at Issuance 99.499, Yielding 1.73%.

Additional Commentary

NEW ISSUANCE WATCH: Entergy Corp. issued 800 MM in notes.
Top Widening Loans Top Narrowing Loans
Jostens Inc. (USD) TL L+950 12/21/2026
Wittur (EUR) TL E+850 09/19/2027
NCL Corp. LTD (USD) TLA L+150 01/02/2024
Philadelphia Energy Solutions (USD) TLA L+625 12/31/2022
Safe Fleet Acquisition Corp. (USD) TL L+675 02/01/2026
Mavenir Inc. (USD) TLB L+600 05/08/2025
American Gaming Systems (USD) TL L+1300 02/15/2024
Fleetpride Corp. (USD) TL L+450 12/19/2025
Kindercare Education LLC (USD) TL L+825 08/16/2025
Verifone Inc. (USD) TL L+400 08/20/2025

Loans and Credit Market Overview

SYNDICATED LOANS HIGHLIGHTS:

Deals recently freed for secondary trading, notable secondary activity:

  • Symantec Corp., Broadcom LTD, Toll Brothers Inc., Cole-Parmer Instrument Co.

OVERALL CREDIT MARKET:

Long-term bond yields are expected to hit a cyclical peak in 2019 given tight fiscal policy and lagging global economies. Europe remains checked by stubbornly low inflationary forces.  Positive effects remained in force:

  • TED spread held below 16 bp (basis points), as of 08/24/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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